2006 operations

A continued good market resulted in a very good 2006 for Cybercom. The company has benefited from greater price scope, primarily in IT and telecom services. Cybercom stands firm, and business has become even stronger during the year.

The past year brought management changes as president and CEO Mats Alders and executive vice president Bengt Levin left Cybercom after many years of service. Patrik Boman will assume the position of president and CEO in May 2007. Until then, Peter Keller-Andreasen is acting president and CEO. He joined Cybercom in 2001 and is managing director of the Danish operation.

Operational management continued to drive the company forward and, for the eighth consecutive quarter, Cybercom shows strong operating margins: 9.5% for the year and 12.0% for Q4 2006.

The 10% operating margin objective for the year was missed at the finish line; extra costs from management changes and a buyout bid from JCE Group made the difference.

Excluding these extra costs, the operating margin was 10% for the full year and 14.5% for Q4 2006. This is a significant improvement compared to previous years - Cybercom's best result ever.

Joint venture in India

Offering offshore opportunities is becoming an increasingly key competitive factor because today's companies select outsourcing to an ever increasing extent. When large companies contract for consulting services, suppliers must be able to fulfil offshore capacity requirements in tenders.

In April 2006, Cybercom started a joint venture in Mumbai (previously called Bombay) with Datamatics Ltd, an operation in India. Already, Cybercom has 12% of its delivery capacity in India. It is estimated that within three years, offshore operations will generate 15-20% of the company's revenues.

Frame agreement

In 2006, Cybercom retained and renewed a number of frame agreements (master contracts). One is with TeliaSonera and covers its entire Nordic operation during 2006 and 2007.

Work on Sony Ericsson's external web sites also continues. The agreement is valid until 31 December 2008. A large portion of this project is assigned to Cybercom's newly started offshore operations in India. This is Cybercom's first offshore project.

Cybercom has also signed frame agreements with new customers. One is the Swedish Civil Aviation Authority, which has named Cybercom as its IT services partner. The agreement runs until October 2009 with opportunity for a two-year extension. Other key customers with which Cybercom signed frame agreements are Ericsson, Tetra Pak, and SMHI.

Frame agreements are crucial for Cybercom and for the industry as a whole, because customers place increasing volumes of work with fewer consulting companies. Cybercom now has frame agreements for all large business relationships. Together these amount to 78% of net sales.

Cybercom's major customers include:

• Assa Abloy
• Ericsson
• Millicom
• Nokia
• PFA Pension
• Regeringskansliet
• Reuters
• SEB
• SKF
• Sony Ericsson
• Tele 2
• TeliaSonera
• Teracom

Broadening the customer base

Most of Cybercom's revenue comes from the telecom sector, but the customer base has widened during the year. New sectors include industry, banking and financial services, and more projects from state and local authorities. This closely follows Cybercom's strategy to develop spin-off business in areas in which the company has specialist competence.

New notable customers include:

• E.ON
• Ica
• Lowe Tesch
• Swedish Civil Aviation Authority
• SAS Institute
• Sirius
• Stokab
• Svenska Spel

Other events in 2006

• Cybercom closed its Norwegian operation because of a weak earnings trend and not enough critical mass. Costs for this were taken in Q4 2006. The closure has no negative effect on EBIT for 2006.
• The UK operation shows a very strong earnings trend, and operations in Singapore grew 100% since it was acquired in April 2005.
• Testing and verification of Ericsson Mobile Platform (EMP).

Events after year-end 2006

• Acquisition of Varchar, an IT consultancy with operations in the Öresund region. The acquisition gives Cybercom access to valuable .Net expertise and new customer possibilities in the region.

Sales and income

Operating profit for 2006 totalled SEK 50.9 million (34.7), a 47% increase and Cybercom's strongest result ever. This corresponds to a strong 9.5% operating margin (7.4).

In 2006, Cybercom simultaneously displayed growth and strong profitability. Sales for the entire year amounted to SEK 535.8 million (466.4), a 15% rise in revenue compared to 2005. Cybercom reported 10% organic growth.

Net financial items stood at SEK -0.8 million (4.4). Profit after net financial items totalled SEK 50.1 million (39.0), a 9.4% net margin (8.4).

Investments in 2006

Investments in property, plant, and equipment stood at SEK 5.0 million (6.2) on 31 December 2006. Net investments in intangible assets, excluding goodwill, totalled SEK 0.7 million (4.7).

Liquidity and cash flow

The Group's cash and cash equivalents totalled SEK 88.9 million (55.5) on 31 December 2006. Cash flow before changes in working capital amounted to SEK 55.0 million (38.8) during 2006. Working capital fell by SEK 20.6 million during the same period. In total, cash flow from operating activities was SEK 34.4 million (26.5).

Financial position

Equity on 31 December 2006 was SEK 272.4 million (238.2), yielding a 66.6% equity/assets ratio (67.7). Equity per share amounted to SEK 22.11 (19.33).